Aiming to become the global leader in chip-scale photonic solutions by deploying Optical Interposer technology to enable the seamless integration of electronics and photonics for a broad range of vertical market applications

Message: reddit forum, part 2

[SV, 25:08] Obviously everybody’s.. the thing about China obviously is that they love tech and they obviously value it a lot. Especially as that tech comes closer to maturation and scale. I think they recognize the value. So, its not like we’re out and about and looking. It’s good to know that there are players, PE’s, that are willing to come in and be part of the story, and so we just kind of the nurture of these relationships. So when the time comes, tapping into that value is clearly an option for us.

[AB, 25:50] Going from China over to Europe. What is the status of the relationship with the “Leading European Optical Systems Company” for the 400G data center application? …mentioned in a previous release in Sept. 2020, I believe.

[SV, 26:05] We’re working really closely together. We’ve completed the designs. The designs are running in the fab. We’ll get wafers back in January. We’ve grown this relationship so it’s a couple of different product lines… two different opportunities, CWDM4 as well as LR4. We’re executing our plans. Obviously, this customer is committed. We’ve got advanced PO’s for the product. Their customers are excited about the products that we’re building. That part of the relationship’s going well. I wish we could convert a lot of the other deals we’ve got going as quickly so we can execute the plans there. But, this is going really well.

[AB, 26:53] And the North American Tier 1 partner. Any updates you can give us on the working status with them? I think it was mentioned that there were discussions aimed at products to be designed qualified and incorporated into that customers product portfolio.

[SV 27:07] We’re still engaged. So, you know back in 2020 we kind of finished this technology validation/demonstration of our capabilities. There were several discussions around what kind of product one might design in with the customer. They have their own incumbent technologies, of course, just like a lot of other people they’re heavily invested in a certain way of doing things with silicon photonics, etc. So, at the end of the day a product was defined, but we didn’t have what needed to be designed for that particular product at that point in time, So we’ve designed it now. And by Q1 [2022], we should be in a position to have products that meet that specification that was defined, and then we would compete. Obviously, there are others that are servicing that market and that space today. [That] was one of the reasons we also did the deal we just announced a couple of months ago on the other supplier for the lasers. You know there are two things that we didn’t have. One was the laser that met the actual specifications that were required. Prior to that we were building our lasers at Denselight. [Those] didn’t meet the requirements that was needed for that particular application, so we worked with Almae and now we’ve got a deal with another supplier so that kind of solves that hole on the laser side. There were some unique filter designs that were required for the particular application, and we’ve gone through our couple of learning cycles. So we are doing this in parallel with all of our other activities so we are not really just focused only on this. We’re keeping the dialogue going, we’re providing status updates, and when we think we are ready with a value engineered product, then we will re-engage. But at this point in time we’re still in the development phase of the product that had been defined back in 2020.

[AB, 29:09] Now we are going to shift gears we are going to talk to you about some competitors. This question is actually coming from investor J. S. who is a sharp guy. And he’s here in British Colombia and I know everyone in Poland is concerned for the folks in B.C. with the disastrous flooding happening here. How does Poet’s Optical Interposer based optical engine compare to competitor’s optical engines? Does Poet have superior technology? So he’s saying many of these competitors use the same catch phrases that Poet does. Ayar Labs for example claims they’re enabling the next phase of Moores Law by leveraging high volume packaging and semiconductor partners. Are these apples-to-apples comparisons? So as far as you know, does Poet have superior technology?

[SV, 29:50]  I’m not 100% familiar. I mean we’re nervous. I first got exposed to them in 2015 when I joined Poet. They’re about 6 years long in the tooth as well. I haven’t seen… I mean the last I checked I think there kind of moving into the coherent space. Ayar Labs I’m familiar with, of course, they’re pushing for photonics computing, kind of end system applications. Look, everyone always thinks their invention or product is superior. Obviously these are private companies and they’re in a different space from that perspective compared to Poet which is a public venture. They have access to different pools of capital. And we have access to a different pool of capital. So between the technology and the companies we are different. Third parties will ultimately decide. Although what Poet’s doing, you know, we’re in the data communications, data center market. Our technology is adaptable to co-packaged optics applications. And you know we’ve got an engagement on the artificial intelligence space to do that. Ayar labs is doing photonics computations using a silicon photonics approach. Which one’s going to win out. It's really hard for me to predict. All I can say is we got a great technology platform. We’ve got a roadmap with 3D packaging that is truly unique. The nice thing about what Poet does is, it’s a very simple platform. It’s easy to understand for the folks that we’re presenting it to. There’s no complexity. It’s simple to manufacture. And so we do think that we’ve got a great capability. It’s going to take some time to develop completely. But I think we’re going to ultimately win out. I Think. We’ll see. Look there’s so many competing options in the market. We’re one of them. And we’re in the conversation with the big guys, just like everybody else might be in the conversation. I think as we get the first product out and ramped, I do believe that the impact of that is going to be significant in terms of saying “Ok, now I can plan a roadmap around you guys because you’ve got the first one under your belt. So its really important that we do that. While I would love to constantly think about doing everything that I need for the future, we’ve got to take care of the present and then build our way up to where we think we can get to. But in terms of patents and ideas, we’ve got so many new ideas that are in the pipeline to be patented. Especially as we get to 3.2Tbits co-packaged optics area, with the packaging capabilities of our interposer. So I’m pretty excited about what we think we can do, and we’ve got to just keep the focus and deliver.

[AB, 33:14] Hers a question talking about specifically the sensing wearables and medical devices. How does Poet compete against, the questioner says Rockley Photonics, obviously Rockley isn’t the only one in that space.

[SV, 33:30] Yeah, again, Rockley… again a very different company. They raised almost $400 million dollars during the development phase. They set up a joint venture with HengTong, who’s one of the people that we talk to routinely. They’ve kind of pivoted. So they’ve moved away from data communications and almost 100% of their focus is on medical.  Poet has a fundamentally similar technology platform as Rockley. So if they can do something in the medical space, I think our platform can do it equally well or better. And so we are looking at that. We have had some discussions with folks in China. Particularly very, very large smart watch type people. And we’re exploring some options in that space as well. I think we need to be careful that we don’t get too thin in our development resources. We really feel like we’ve got to get the datacom done, which is something Rockley wasn’t very successful in doing. I mean they’re… I think they first had a plan to do 100G. Didn’t happen. 200. Didn’t happen. 400 and it still hasn’t happened, right? And about 6 or 7 years.  Given that we have actually translated our ideas into something that can in fact go into production gives our platform a little more credibility in terms of being adaptable to the multiple verticals that we want to go after. That’s our story, that’s the plan.

[Ab 34:27] regarding the 800G continuous wave laser patent. What makes it a seminal patent? Though I think that was your word that you used to describe it, a seminal patent for Poet. And does the patent apply to speeds greater than 800?

[SV, 35:38] I believe I used 800 because that is where we believe we can use the patent itself. I call it seminal because seminal is something groundbreaking, which we think it is. The patent is really about athermal lasers. Typically, lasers move the temperature, the wavelength shifts, and it requires cooling. And we figured out a way to use the interposer to be able to make these lasers that are largely athermal in their characteristics that we think would be a terrific advantage in not just 800G but also coherent. We continue to develop that capability. I think that would be something that would be part of our activity for development in 2022. And as we kind of march our way up the roadmap to 800G. Yeah, I called it seminal because I think its foundational, and its disruptive in it’s nature, which basically makes it seminal.

[AB, 36:50] Turning to Nasdaq listing. What is the share price you hope to uplist at? That’s a tricky one I think. And I think that question is probably related to the planned consolidation that Poet has received approval for from the shareholders. What shareprice would you like to be at before that consolidation is announced?

[SV, 37:18] I don’t want to speculate on share price. It really doesn’t make sense for me to do it. Of course we would love for it to go up to the moon right? We believe we are deeply undervalued now, and it’s been difficult to see what’s transpired over the past several months. The issue related to the share price and the consolidation ratio is, if you are going to move to the Nasdaq, why are we doing that? We’re doing that to gain access to high quality institutions and investors.. take a long-term view of the company, and provide more liquidity to all the shareholders. To provide more value to all the shareholders. And then really its where the big tech companies are and we’ve got to do it. If you are going to do that, you also want to make sure that you are accessing as many of the institutional investors and several of them can’t invest in stocks less than $5. Even their brokers are prohibited from soliciting orders from retail clients for such stock. So we don’t want to be in that position, having made the move, and artificially limit the type of investor. So we would like to break that $5 per share barrier, but obviously we don’t want to do it with a terrible consolidation ratio. So obviously we formed a committee, off the board. We are going to be looking at it and reviewing the situation and determining what the right timing would be, the right consolidation ratio would be. It’s a balance. We just go through the process.

[AB, 39:19] …perhaps something that could help is that $300 million shelf prospectus that can be used over the next 18 months or so. You can access that for capital for acquisitions or JVs. Is there a plan for that spending?

[SV, 39:32] Our space.. It pays to have maximum flexibility. That’s what the shelf is about. You know, nothing imminent. We just want to have the flexibility to be able to use the shelf if we need to.

[AB, 39:50] With $24 million in the bank, will the company be spending more on marketing to help increase visibility and awareness in the US market?

[SV, 40:00] We are undertaking website redesign… I think we are kind of old in the tooth as it relates to that. We’ve made so much progress as a company. So we are hiring a branding firm to help us get a little bit more strategic in our marketing, as well as brand our products better than just calling it the Poet optical interposer. We’re likely to create more content for our youtube channel. I will probably do something new at the OFC in March. I might start attending more conferences. That’s one of the things that I was doing earlier and kind of just stopped. And then the pandemic hit. So I believe going out there… at the conferences, interacting with people and providing a lot more visibility for Poet overall. I think we started that at the CIOE, where [Dr.] Mo represented us to very high acclaim at the CIOE conference. And I think we will do a lot more of that as well going forward.

[Ab, 41:09] That’s Dr. Mo Jinyu and she’s a brilliant part of the Poet team based in Shenzhen. Talking again about spending… Like almost every tech company, in the early growth stage Poet isn’t going to be turning a profit right away because a lot of the spending is going to get put back into the company. Can you eleborte on the plans for the companies CapEx spending? Short term anyway?

[SV, 41:26] I think we have immediate plans for 2022. It’s primarily around manufacturing and scale. There’s equipment that we’ve got to consign at Silterra. We will be spending some money on that as well. We got a really good deal on some wafer processing capability that we’ll be putting in Singapore. We’ve also been able to leverage the Singapore government for a lot of CapEx. They will be putting this CapEx in as part of this hybrid integration center we’re putting in place. So that has helped really minimize the out-of-pocket CapEx for Poet. We will be spending on the order of about $2 to $3 million dollars in CapEx min this coming year. Primarily to kind of ready us for the manufacturing ramp next year.

[Ab 42:38] …can you explain why there’s the need to keep the options pool at 20%?

[SV, 42:44] Look, first of all the last thing I want to do, or anyone in the company wants to do, is to take any action that would be a hindrance to our investor’s gains. Our mission is to increase shareholder value. We always want to do what’s in you interests and actually having that options pool available to us is an asset. We can use it to attract talent. Especially today, I don’t know whether you guys have experienced this but there’s an intense fight for talent right now. There is a dearth of talent in almost every engineering discipline globally. It’s impossible for a small company like ours to go attract the best talent without having the capability to be able to provide stock options. And then maintain a low burn rate as well in the industry. Engineers are in higher demand than ever, today. And the key reason… We’re still hiring. We’re bringing in… a new person joined Allentown last week. We got a new person joined Poet Singapore this week in product engineering. We can bring them in because we are able to demonstrate the potential that the company has in front of us. They know that if we win, they win. It’s an important part of our compensation plan. We want to be able to have that flexibility. While there is a lot of emotion around it, it’s an important part of the company’s growth to attract the best talent.

[AB, 44:50] …What is the next big step in Poet’s evolution?

[SV, 44:56] I believe, and I’ve said this publicly to many people including potential customers, we have a very unique integration platform. We are the only platform in the world that can integrate DML lasers the way we do. And you know we are leveraging it for 100, 200G CWDM4. We’re leveraging it for LR4. Our stated path is to, at 400G, is to use silicon photonics modulators and the CW laser and we’re doing that. We’re also considering just extending our DML roadmap to 400G, which means.. We already have the photodetectors, the receive on that done.. completed. We can work with getting access to a higher speed laser, then this DML platform becomes extremely viable at 400G, really disruptive. We’re working on a few things, but the next big step in our evolution is to really mature this DML platform which we have which we believe is very unique in the world. I’ll get into the state of manufacturing and then look to further expand the frequency and data rates of that platform to also support 400 to 800. We’re taking a two step approach to 400G. We’ve got our one step on the CW laser modulator, but we’re now starting to look at “Hey , we’ve got this platform. Nobody else does. It’s working really, really well at 100, 200. How about we can just extend this to 400.” Then do we get a really quick slingshot into that market, with something super differentiated? So we are looking at that. More to come, watch this page.

[AB, 47:04] What are you thankful for?

[SV, 47:10] Wow. On the personal side, family. Great friends all over the world. Good health. Good wines. And you know I think on the business side I am really thankful for the team. They are so committed. Several of them have left good jobs to join us because we share a vision. We share a strategy. It’s been great interacting with them, working with them, several of them I hadn’t seen in a couple of years. It’s been great meeting them so I’m thankful for that. And you know I am thankful for having the resiliency to do what we have to do with this company. Pivot it. Give it a new direction. Give it a new strategy. Execute on the strategy and continue to make progress to getting products in the hands of customers. Products that they really need and want. And having that resiliency in the company to be able to do that I think is also terrific. So yeah, a lot to be thankful for.

[AB 49:00] [Adrian’s own wrapup]

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